Airbnb Inc - Strong performance overshadowed by soft guidance

17 May 2023
  • 1Q23 revenue/PATMI was within expectations at 19%/6% of our FY23e forecasts because of seasonality weakness. Revenue growth of 20% YoY was led by a 19% YoY surge in booking volumes. We expect profitability in 2H23e to rebound strongly driven by summer travel demand and higher operating leverage.
  • Airbnb expects 2Q23e revenue growth of 12-16% YoY. Booking volumes face pressure from tough comparisons following the Omicron-fueled pent-up demand in 2Q22. Management reiterated its adj. EBITDA margin guidance of about 35% for FY23e.
  • We upgrade to BUY from ACCUMULATE recommendation after the recent fall in its stock price. We lower our DCF target price to US$143.00 (prev. US$149.00) with a WACC of 7% and terminal growth of 4%. We lower our FY23e revenue estimates by 2% due to softening travel demand, while increasing our PATMI by 13% to account for higher interest income. We believe Airbnb platform offers better non-urban location listings versus hotels, benefits travelers looking for long-term stays, and is more family and group travel-friendly.

 

 

The Positives

+ Consumer travel demand remained strong. In 1Q23, revenue grew 20% YoY to US$1.8bn despite 4% FX headwinds, implying 24% YoY growth on a constant currency basis. The significant growth was driven by record booking volumes and stable average daily rates (ADRs) of US$168. The number of nights and experiences booked jumped 19% YoY to 121.1mn driven by growth in cross-border trips (up 36% YoY) and urban nights booked (up 20% YoY). Long-term stays (28 days or more) accounted for 18% of total booking volumes driven by the flexibility granted by remote work.

 

+ Supply continued to accelerate. Total active listings on the platform increased by 18% YoY to an implied 7.6mn. Both urban and non-urban supply increased by 18% YoY. The supply growth is mainly due to continued product innovation to attract new hosts (Airbnb Setup, Ask a Superhost, and insurance and better tools for hosts) and more people turning to hosting to earn extra income.

 

The Negative

– Soft 2Q23e revenue guidance due to tough comparisons. For 2Q23e, Airbnb anticipates total revenue to be in the range of US$2.35bn to US$2.45bn (up 12-16% YoY). The slowing revenue growth is mainly because of tough comparisons following the Omicron-fueled pent-up demand seen in 2Q22 and as well as lower average daily rates (ADRs) due to the business mix shift towards urban and APAC regions.

 

 

About the author

Ambrish Shah
US Technology Analyst (Software/Services)
PSR

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